If consistency is the hobgoblin of little minds, the Obama administration must be thronged with elves. For the second time this year, the Obama health-plex is staking an entire government funding stream on the retention of full subsidies for Planned Parenthood.

In April it was the fate of a continuing resolution to fund the entire federal government for the rest of this fiscal year. President Obama personally threatened to veto the cut of a single federal dollar for the abortion-industry giant when it was one of only two issues stymieing agreement with congressional Republicans. Now, thanks to a letter from the Center for Medicaid Services and its recess-appointed chief, Donald Berwick, Indiana’s entire $4 billion federal allotment for Medicaid is at risk — all because the Indiana legislature had the temerity to disallow Planned Parenthood’s participation in its state Medicaid plan.

Indiana is hardly alone in its sentiment that the house that Margaret Sanger built doesn’t help the neighborhood. Its decision to deny Planned Parenthood participation in programs that provide STD testing, family planning, and other services mirrors the House of Representatives’ decision to defund the agency entirely and the preferences of several other states as well. A series of Supreme Court rulings decades ago ratified the constitutionality of municipal hospitals deciding to defund abortion and favor childbirth services over abortion; it is no less sensible for a state to disfavor subsidies of any kind for agencies that clearly favor abortion over childbirth.

Hoosier officials point out that the women’s health services the federal Medicaid program underwrites – encompassing all of Planned Parenthood’s non-abortion repertoire — are amply covered by other outfits. Indiana has some 800 qualified providers who manage to deliver care without controversy. Federal officials insist that states can’t curtail funding for agencies based on their “scope of services,” but only on grounds of fraud or other malfeasance. Planned Parenthood’s record on the financial-responsibility front, however, is less than stellar.

Indiana’s attorney general says that the state will continue to contest a Planned Parenthood lawsuit insisting it is entitled to taxpayer support. The pressure from Washington may become irresistible if Berwick and company follow through on their implicit threat to withhold every dollar of federal medical aid to the poor unless Indiana relents. That fact is a sober reminder that more is at stake in this battle than the fungibility of abortion revenue. The federal health-care bureaucracy is an unelected piper calling an increasingly aggressive tune. When 2013 rolls around and Obamacare takes full effect, that tune will rise to a symphonic roar.

— Charles A. Donovan is senior research fellow in the DeVos Center on Religion and Civil Society at the Heritage Foundation.